Underperformance PSUs in domestic stock markets is expected to weigh on the government’s ambitious asset sales target of Rs 1.05 lakh crore this financial year. The BSE PSU Index comprising 61 stocks has fallen 7.91% since April 1 comparing with 4.65% gain in Sensex in the same period.

State-run firms like Indian Bank, Chennai Petroleum Corp. Ltd, IFCI Ltd, Oriental Bank of Commerce, Central Bank of India and Allahabad Bank have lost as much as 35-55% of their market value since April.

The government had in Union Budget 2019-20 set a record disinvestment target for the fiscal, an increase from ₹90,000 crore projected in the Interim Budget 2019-20. The government has, however, managed to raise a meagre ₹15,483.05 crore so far. With only four months left for this fiscal to end, achieving the disinvestment target appears a tall task.

Since July when the budget was presented, the BSE PSU Index has shed 10.16% while the Sensex has risen 2.70%. The government has stuck to its fiscal deficit target of 3.3% of GDP for FY20 despite revenue collections falling short of estimates. This makes it even more crucial for the government to sell stakes in state-run firms to raise funds.

From the fiscal deficit standpoint, disinvestment proceeds will be key to bridge the revenue shortfall, given the lower-than-expected collections in GST and the recent cut in corporate tax.